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Cheap electricity era comes to an end

"The cheap electricity era is coming to an end, here and in all other markets," chairman of Eskom, Valli Moosa said in Eskoms 2007 annual report.

The South African utility, which is embarking on a huge expansion programme which will see the doubling of it’s capacity over the next 20 years, has been the source of the world’s cheapest electricity in recent decades. South Africans pay about 28 cents per kWh followed by Finland, Sweden and Canada at around 48 cents per kWh, the South African Press Association reported.

 "Higher primary energy costs, greater borrowing and bigger capital spending highlight a growing mismatch between currently agreed price increases and prudent forward planning," said Jacob Maroga, CEO of Eskom.

A 5.9% increase was permitted by the electricity regulator 2007/2008, up from 5.1% in the previous year.

The expansion programme, costing approximately $21 billion, will reduce the current coal generation component down from 88% to 70%.

A target of 1 600MW of renewable energy has been set for biomass, solar, hydro and wind generation facilities, with nuclear’s contribution to the total generation capacity increasing between 13 000Mw and 20 000MW over the next 20 years.